Sustainability-Oriented Open Innovation: A Small and Medium-Sized Enterprises Perspective

Abstract

This study aims to develop a model of sustainability-oriented open innovation from the perspective of SMEs. Sustainability performance improvement is a problem for small and medium-sized enterprises (SMEs) due to limited resources. By implementing open innovation, SMEs can take advantage of external resources to innovate in their operations, thereby increasing sustainability performance. The model developed in this study consists of eighteen constructs: sustainability performance, innovativeness, inbound open innovation, six constructs representing organizational relationship factors, and nine constructs representing knowledge factors. The research model is evaluated using Partial Least Square Structural Equation Modeling. The respondents of this study are 199 SMEs that produce Batik Tulis, a traditional Indonesian fabric. The result shows that innovativeness positively relates to sustainability performance and inbound open innovation has a positive relationship with innovativeness. Competence mapping and network position are the organizational factors that positively affect inbound open innovation. The knowledge factors that positively affect inbound open innovation are the appropriation of knowledge output, connective capacity, inventive capacity, and innovative capacity. Identifying these six supporting factors for sustainability-oriented open innovation in SMEs based on empirical evidence is the main theoretical contribution of this study. As a practical implication, SMEs can gradually improve these six supporting factors by being active members and contributing to industrial associations.